India’s public sector undertakings (PSUs) have shown robust profit growth, with a 36% CAGR from FY20 to FY25. Motilal Oswal Financial Services Ltd. (MOSL), a leading Indian brokerage and financial services firm headquartered in Maharashtra, highlighted in a June 26, 2025 report that select PSU stocks remain attractive for long-term investors. Top picks include State Bank of India (SBI), Hindustan Aeronautics Ltd. (HAL), Bharat Electronics Ltd. (BEL), PowerGrid Corporation of India, and Coal India.
Motilal Oswal Financial Services Ltd. (MOSL), a prominent brokerage and wealth management firm headquartered in Maharashtra, India, has reaffirmed its bullish outlook on select Indian public sector undertakings (PSUs). The firm released its latest analysis on June 26, spotlighting PSUs as long-term investment opportunities despite a recent market correction.
MOSL noted that Indian PSUs delivered a 36% CAGR in profits between FY20 and FY25, outpacing private-sector growth and significantly contributing to India Inc’s profitability. This resurgence has been led by sectors such as banking, defence, and infrastructure.
The report listed State Bank of India (SBI), Hindustan Aeronautics Ltd. (HAL), Bharat Electronics Ltd. (BEL), PowerGrid Corporation of India, and Coal India as top long-term PSU picks. These entities were chosen based on structural tailwinds, policy support, consistent earnings growth, and improved governance.
In FY25, PSU profits dipped slightly—by 2% YoY—mainly due to a sharp decline in oil and gas sector performance. However, excluding this segment, PSU profits actually rose by 16%, showing continued underlying strength.
Valuation-wise, the BSE PSU Index trades at a P/E of 11.7x, providing room for growth after peaking at 13.8x in July 2024 and dropping to 9.8x in February 2025. The current market cap of ₹64 lakh crore is still 14% below its all-time high.
Between 2015 and 2020, the PSU Index underperformed but rebounded sharply between 2020 and 2025 with a 32% CAGR. The report also noted a decline in loss-making PSUs—from 45% in FY18 to just 1% in FY25—reflecting better operational efficiency.
Looking forward, MOSL estimates a 10% PAT CAGR for PSU stocks from FY25 to FY27, driven primarily by banking and energy sectors. The transformation of Indian PSUs into competitive, transparent, and policy-aligned enterprises continues to attract investor interest.
MOSL emphasized that PSUs have evolved from inefficient bureaucratic units into powerful, profit-generating institutions with a meaningful role in India’s economic growth trajectory.